The first and most difficult step to determine whether contract heifer rearing is a viable option for a dairy producer is to do an in-depth financial analysis of the heifer enterprise on the dairy farm. Don Gardner, DVM, Gardner Bovine Veterinary Service and Gardner Heifers Inc. Huddleston, Va., told attendees at the 2010 AABP-AVC meeting that this must include a complete and accurate accounting for the variable and fixed costs involved.

Allocation of these costs to the heifer enterprise can be quite elusive since the heifer enterprise is typically imbedded in the milking enterprise. Currently in 2010 average heifer enterprise costs are ranging between $1,600 to $1,850 over the rearing period of the heifer. Queries to experienced successful heifer growers indicate that in stand-alone efficiently run operations, custom raisers are capable of returning Holstein heifers at 22 months, ready to calve at 24 months of age and at 1,300 lbs [590 kg] for a cost of about $1,100.

Under this example heifers arrive at the grower around 5 months of age weighing 300-400 lbs [136-182 kg]. Allowing for approximately $375 in costs incurred by the dairyman before going to the grower, the dairy producer has the opportunity to calve heifers at appropriate age and weight for approximately $1,475.

Zwald et al surveyed 44 Wisconsin dairies’ average cost of rearing from birth to calving in 1999 and 2007. The cost ranged from $922 to $1,807 per heifer with $1,360 being the average in 1999. That translates into an average cost per day of $1.69 with a range from $1.33 to $1.94. In 2007 the cost ranged from $1,595 to $2,935 with an average of $2,148. Karzes in New York surveyed 17 large dairy herds in 2007. He found the cost of rearing ran from $1,598 to $1,867 with a $1,734 average.

In the past, feed costs were the top expense category on a dairy farm followed by labor. In the last few years, replacement costs have moved into second place dropping labor to third.